The Integrated Economic Zone (IEZ): A Tool for Reconstruction and Development of Haiti

1. The Integrated Economic Zone (IEZ): A Tool for Reconstruction and Development of Haiti Port-au-Prince, Haiti December 2011

2. Integrated Economic Zones (IEZs) Are Development Districts That Combine Complementary Economic Activities Panama Pacifico (former Howard Air Force Base), Panama • Many IEZs have industry at their core • Where offices and retail space are required, IEZs can include a business park • Others incorporate commercial, residential, and leisure areas

3. A Flexible Concept That Can Be Used to Develop Many Different Types of Places Subic Bay Freeport, Philippines • Some are linked to major transport hubs (ports, airports) and include logistics facilities

4. A Flexible Concept That Can Be Used to Develop Many Different Types of Places Aqaba Special Economic Zone, Jordan • IEZs can focus on tourism develop-ment • Include Free Zones and Industrial Parks, such as those already underway in Haiti

5. IEZs: Not Just a Place, But a Development Tool In line with Haiti’s Action Plan for Reconstruction and Development Over 380,000 jobs by 2030 IEZs Can: Deliver: Job creation Improve the business climate Over 200 industrial projects Reconstruction Develop secure, well-managed industrial, commercial, and residential areas Residential and tourism investment Decentralization Pilot new policy approaches to regional development and competitiveness

6. Contents of Final IEZs Workshop • Following this overview, the workshop will include more detailed presentations on: • Private Sector demand for serviced land in Haiti • Assessment of candidate sites throughout Haiti for IEZ development • Need for enhancing the IEZ regulatory and institutional framework to enable investment in Haiti • Economic/Financial Analysis • Discussions/questions after summary presentation

7. Cumulative Total National IEZ-Related Employment IEZ Demand Could Generate 380,000+ New Jobs Jobs: 143,350 Jobs: 382,300

8. Haiti offers a competitive environment for apparel producers • For commodity products, rent beyond USD 3/m2/month would impact Haiti’s competitive position Business Case –T-Shirt Manufacturer

9. Higher-value products (chinos) provide a strong market opportunity • Haiti would remain competitive even if rent is increased above USD 3.00/m2/ month Business Case – Chino Manufacturer

10. Using Haiti’s raw agricultural materials, investors can expand into processing mangoes, cocoa, etc. • Improvements to power tariffs would improve this position Business Case – Agri-Business: Food Processing

11. For rebuilding, Haiti can capture some metals components and plastics manufacturing operations • Improvements to power tariffs would improve this position Business Case – Building Materials: Metal Components

12. … But Over 2,000 ha of Serviced Land are Required for Investors Cumulative Total National IEZ-Related Land Serviced Land: 2,140 ha Serviced Land: 606 ha

13. Lack of Industrial Space Remains a Key Investment Constraint PIM (17 Ha) Year 2: 17 Ha WIN (24 Ha) Year 2: 24 Ha HINSA (35 Ha) Year 4: 35 Ha National Industrial Parc (150 Ha) Year 2-3: Phase I - 75 Ha Years 4-8:Phase II - 75 Ha N/NE of PaP (120 Ha) Year 3-6: Phase I - 60 Ha Years 7-10:Phase II - 60 Ha

14. IEZ Could Develop Poles of Growth and Linked Corridors Northern Regions (Cap Haïtien to Fort-Liberté) Metropolitan Region (PAP to Cote des Arcadins) Southern Region (Les Cayes to Jacmel) • Light-manufacturing: Metro PAP and North • Tourism: South, Côte des Arcadins, Cap Haïtien • Related industries, services and suppliers in all and connecting corridors

15. Strategy for IEZ-Related Development: The Way Forward

16. High-Performing Sites in the Metropolitan Region

17. IEZ Development in the Short Term Park Hispaniola West Indies Free Zone PIM Extension Smaller IEZ projects could respond to market pressures faster due to their more advanced state of preparation: PIM extension, West Indies Free Zone, and Park Hispaniola

18. Example Site: GanthierLocation: East of PAP

19. Example Site: GanthierLocation: East of PAP Example Site: Ganthier

20. N+E of Port-au-Prince: Demand Projections and Site Requirements Demand Factors • Strong Korean investor interest in apparel/ garments • Close to port and labor supply • Anticipated rents for built industrial space: $3.00/m2/month • Responds to shortage of serviced industrial land in PAP Site Development Requirements • Prepare resettlement plans • Identifyinstitutional arrangements for implementation • Mobilize financing for trunk infrastructure Total Area: 985

21. High-Performing Sites in the North and Northeast Regions National Industrial Park (NIP) CODEVI

22. Example Site: North Location: Fort-Liberté Bay

23. Example Site: North Location: Fort-Liberté

24. Demand Factors • NIP satisfies current industrial demand requirements in North • Potential for beach, eco-, and cultural tourism • Long-term potential as “end of chain” port platform for export to USA • Anticipated rents for built industrial space: $2.70/m2/month North: Projected Demand and Site Requirements Site Development Requirements • Mitigate negative environmental impacts after EIA is completed • Ensure main road connectivity Total Area: 1,080 • An eco-tourism resort at Fort-Liberté is also foreseen in the longer-term.

25. Can IEZs Succeed in Haiti? • What might a successful IEZ in Haiti look like? • What does success look like for an IEZ in Haiti? • What factors would determine an IEZ’s success?

26. What Might a Successful IEZ in Haiti Look Like? • Mixed industry and residential zone of about 150 hectares • Developed in 2 phases • Providing services and facilities for both communities • Located within easy reach of PAP • Power and clean water for both the site and the surrounding region

27. Market Disequilibrium in Haiti Price Price developers need to cover costs Gap to be covered by PPP Price tenants are willing to pay t0 tn Time

28. What Does Success Look Like for an IEZ in Haiti? • GOH: • Develops the site to fully serviced plots • Leases the site to a Private Sector Manager/Promoter at a lease rate determined by tender • Earns returns above 10% and recovers investment in less than 5 years, because it borrows at below-market rates • Private Sector: • Construct Factory Buildings and lease both buildings and serviced plots at market rates • Promotes, manages, and administers the IEZ • Earns returns above 15% and recovers investment in less than 8 years, because it leases the site at below-market rates • Government Role Justified By: • Economic Return in excess of 30% with a Cost/Benefit Ratio of 1.4 • Contribution of USD 450 million to the Gross National Product of Haiti

29. Financials of Pilot 150 Ha IEZ

30. What Factors Will Determine an IEZ’s Success? • Prices Stability • The Industry Mix attracted • Willingness and Ability to Pay of Potential Ready-Made Garment Tenants • Labor Conditions, Productivity, and Price • Site Development Costs • Cost of Capital or Interest Charges

31. are a good investment for the GoH Investment in IEZs Can Yield Significant Economic Benefits Over 20 years, $1.5-billion of investment by GoH would catalyze zones that can spark… … Significant economic impact: • Direct and indirect jobs • Tax and fee revenues • Business spending • Consumer spending Private Partners could make at least a real return of 15% 4x return

32. Current Zones Regime Is Under-Performing

33. Short-term: IEZ Regulations via Executive Order to fill regulatory vacuum • Medium-term: IEZ Law and Authority IEZ Legal/Regulatory Strategy

34. How-To: Investment Climate Action Plan

35. How-To: Investment Climate Action Plan